Horace Mann Companies v. Pinaire

• Decision Date: 06 October 1995
• Docket Number: No. S-94-142,S-94-142
• Citation: 248 Neb. 640,538 N.W.2d 168
• Parties: The HORACE MANN COMPANIES, Intervenor-Appellee and Cross-Appellee, v. Janet PINAIRE, Appellee and Cross-Appellant, James Wilson, Appellee, and Diane Zipay, Appellant.
• Court: Nebraska Supreme Court

Page 168

538 N.W.2d 168

248 Neb. 640

The HORACE MANN COMPANIES, Intervenor-Appellee and Cross-Appellee, v. Janet PINAIRE, Appellee and Cross-Appellant, James Wilson, Appellee, and Diane Zipay, Appellant.

No. S-94-142.

Supreme Court of Nebraska.

Oct. 6, 1995.

Syllabus by the Court

1. Summary Judgment: Appeal and Error. In an appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.

2. Summary Judgment: Proof. The party moving for summary judgment has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law.

3. Summary Judgment. Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.

4. Insurance: Contracts: Motor Vehicles: Compromise and Settlement. Under the terms of the Underinsured Motorist Insurance Coverage Act, an insurer can avoid its policy obligation only if the insured's settlement with the tort-feasor adversely affects the insurer's rights.

5. Courts: Statutes: Legislature: Intent. Courts are expected to give effect to the purpose and intent of the Legislature as ascertained from the entire language of the statute considered in its plain, ordinary, and popular sense.

6. Compromise and Settlement: Words and Phrases. The term "settlement" as used in Neb.Rev.Stat. § 60-582 (Reissue 1993) means that the parties to a controversy must come to an agreement that is a final resolution of the controversy.

7. Claims: Releases: Tort-feasors. A covenant not to sue is not a present abandonment or relinquishment of a right or claim, but merely an agreement not to enforce an existing cause of action, and although it may operate as a release between the parties to the agreements, it will not release a claim against joint obligors or joint tort-feasors.

8. Insurance: Contracts: Proof. The insurer has the burden of proving a breach of a policy clause, and in the absence of showing of prejudice to the insurer, coverage cannot be denied.

9. Summary Judgment: Proof. After the moving party has shown facts entitling it to a judgment as a matter of law, the opposing party has the burden to present evidence showing an issue of material fact which prevents a judgment as a matter of law for the moving party.

10. Judicial Notice: Pleadings: States. To require a trial court to take judicial notice of the law of another state, the existence of that law must be pleaded.

Hugh I. Abrahamson, Omaha, for appellant.

Patrick L. Tripp, P.C., of Tripp, Schweer & Ferraro, Omaha, for appellee Pinaire.

Eugene L. Hillman, of McCormack, Cooney, Hillman & Elder, Omaha, for intervenor-appellee.

WHITE, C.J., and CAPORALE, FAHRNBRUCH, LANPHIER, WRIGHT, CONNOLLY, and GERRARD, JJ.

WRIGHT, Justice.

I. INTRODUCTION

Horace Mann Companies (Horace Mann) filed a petition in intervention in the Douglas County District Court requesting a determination of its liability with regard to an automobile insurance policy with an underinsured motorist endorsement. The district court granted summary judgment in favor of Horace Mann and denied Diane Zipay and Janet Pinaire benefits under the policy. Zipay appeals, and Pinaire cross-appeals. Under the authority granted to us by Neb.Rev.Stat. § 24-1106(3) (Cum.Supp.1994) to regulate the caseloads of the appellate courts of this state, we removed the appeal to this court.

II. SCOPE OF REVIEW

In an appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Wagner v. Pope, 247 Neb. 951, 531 N.W.2d 234 (1995).

The party moving for summary judgment has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law. Medley v. Davis, 247 Neb. 611, 529 N.W.2d 58 (1995).

Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Krohn v. Gardner, 248 Neb. 210, 533 N.W.2d 95 (1995).

III. FACTS

On February 10, 1988, Pinaire, Zipay, James Wilson, and Vivian Roper, employees of Omaha Public Schools (OPS), were injured when the OPS automobile in which they were riding was struck from the rear by an automobile driven by Floyd Sherburne. Sherburne was insured by State Farm Automobile Insurance Company (State Farm), which had a liability policy limit of $50,000 per accident. The OPS vehicle was insured by Aetna Casualty & Surety Company (Aetna), which policy included $100,000 of underinsured coverage. Zipay, the driver of the OPS automobile, was insured by Horace Mann Company. Zipay's policy included "single limit underinsured benefits" in the sum of $300,000.

In December 1989, State Farm paid Pinaire $25,000, and Pinaire and Aetna signed a covenant not to sue Sherburne and State Farm. The agreement was made without the knowledge of Horace Mann. State Farm paid Zipay $9,268 on behalf of Sherburne, but Zipay did not sign a covenant or release. This payment was made without the knowledge or consent of Horace Mann. State Farm paid the balance of its $50,000 liability coverage to other parties in varying amounts.

In September 1991, Aetna intervened to determine the distribution of its underinsured benefits, which Aetna conceded were due and owing to Pinaire, Zipay, and Wilson. On December 6, 1991, Horace Mann intervened to determine what amounts of underinsured benefits, if any, Horace Mann was obligated to pay to the parties under its policy with Zipay. Pinaire's answer prayed for an order declaring that Horace Mann had an obligation to pay Pinaire the $300,000 policy limit. Roper disclaimed any further interest in the payment by Aetna. On March 9, 1992, Pinaire, Zipay, and Wilson, with the consent of Horace Mann, settled with Aetna for the maximum amount of underinsured benefits due under the OPS policy. After reducing its coverage of $100,000 by State Farm's payment of $50,000, Aetna paid Pinaire $34,000, Zipay $8,500, Wilson $2,500, and Roper $5,000.

Horace Mann moved for summary judgment, seeking a declaration of its underinsured liability under its policy with Zipay. The district court entered summary judgment denying Zipay and Pinaire benefits under Horace Mann's policy of underinsured coverage.

The order of summary judgment stated in part:

[Horace] Mann claims that by reason of the defendant Pinaire and Zipay settling with the tortfeasor Sherburne and his carrier State Farm and by accepting payments under State Farm[']s policy and Pinaire giving a covenant not to sue in return for $25,000 and Zipay accepting $8,500 without giving a release or covenant not to sue that Mann's contingent right of subrogation against Sherburne is destroyed and the violation of the policy provisions bars the claims of the defendants under Mann's policy. (Note: State Farm paid out its full liability coverage under its policy). Defendants acknowledge the settlement with the tortfeasor and State Farm, his liability carrier, but claim that Mann's potential subrogation rights have not been adversely affected since Sherburne is for all practical purposes judgment proof and refer to Exhibit No. 3.

However, a careful review of Exhibit No. 3 indicates, without discussion as to whether Sherburne's wife's income and expenses should be considered, that there is $265.84 excess income over expenses. One of the expenses listed is $270.00 per month for charitable contributions. This sum could well be used to pay on a judgment along with the $265.84 excess income or a total of $535.84 is available. There is no doubt in the Court's mind but that the settlements with Zipay and Pinaire have adversely affected Mann's potential subrogation rights and that Mann's policy has been violated so far as the consent to settlement provision is concerned. Hastings v. Fireman's Fund American Insurance Company, 193 Neb. 417, 227 N.W.2d 418 (1975).

The court found it was unnecessary to proceed to answer any additional issues inasmuch as it found that there had been a policy violation that substantially and adversely affected the rights of Horace Mann to pursue subrogation.

IV. ASSIGNMENTS OF ERROR

Pinaire claims the district court erred in sustaining the motions for summary judgment and in determining that her settlement with Sherburne's liability insurance carrier (State Farm) substantially and adversely affected Horace Mann's subrogation interests, thereby allowing Horace Mann to deny underinsured motorist coverage to Pinaire.

Zipay makes nine assignments of error which we summarize as assertions that the court erred (1) in entering summary judgment because there are significant and genuine issues of fact as to whether the settlement between Zipay, Sherburne, and State Farm adversely affected the rights of Horace Mann; (2) in finding no genuine issue of material fact regarding the financial condition of Sherburne and his ability to satisfy a judgment; and (3) in denying Zipay's motion for reconsideration and leave to file an amended answer and cross-petition.

V. ANALYSIS

The issue before us is whether the agreement between State Farm and Pinaire and the payment by State Farm to Zipay allow Horace Mann to deny underinsured...